"Better to remain silent and be thought a fool, than to speak out and remove all doubt"
In honor of Presidential candidate "Mitt the Twit's" gaffe at the Olympics, I thought I'd lead this week's SVB on Wine with a little Presidential rewind of GWBs' greatest hits. <bada-bing!> ...But seriously folks ..... While I don't have GWB's oratory skills (I'm being slightly generous here), I really can relate to his occasional public gaffes. ......but that's not important. What IS important is the Gomberg-Fredrikson Report for May shows cumulative bulk imports accounted for 19.3 million case equivalents shipped into the US in 2012; a whopping 167% increase. That's the equivalent harvest off 27,000 acres of US winegrapes calculated at 12 tons per acre.
That quote in the Blog title? It's often attributed to Abraham Lincoln but similar renderings can be found in Mother Goose, in Mark Twain's writing, and even King Solomon in Proverbs 17:28. That quote - talking instead of remaining quiet - is the core risk when speaking with the press. (Lesson #15 in dealing with the press: You don't have to answer the question especially when its a leading question.) I like to tell reporters "I can't wait to read the article so I can see what I said." While ninety-nine percent of the time the press does a great job, on occasion there is a degree of 'stylistic enhancement' shall we say? .... a little fanning of the flame to sell digital ink perhaps? I can tell you first hand being force-fed a diet of your own foot in the media is no way to lose weight or gain friends.
One such time I wished I'd heeded that wisdom was in 2004 when I wrote in a report the San Joaquin Valley stood a chance of sharing Detroit's fate from the 1970's. A well-read wine journalist at the time decided to interpret my remarks in his own way missing entirely the nuance in my point. (Lesson #16 in dealing with the press: Nuance is bad. Sound bites are good.) The consequence was that I was viewed by folks in Fresno somewhere between the devil incarnate and a clown. Knowing there was is no way to 'un-ring the bell' in the media, I called up Nat DiBuduo and Carson Smith, both senior leaders in the grape growing business in California's Central Valley. I'd never met either but offered to buy them lunch at a Red Lobster in Stockton to exchange views. Carson had Telapia baked in a brown bag paired with a Woodbridge Chardonnay and I had ....well that's not important. What IS important is they agreed to meet me and came without any sidearms or spoiled vegetables.
With my hat in hand, I explained my thinking: Detroit in the 1970's ....our auto industry at the time had a very high cost of production and the efficient Japanese with a currency advantage walked in and carried away market share seemingly overnight. The automakers never in a million years thought American's would accept small Japanese cars which had a history of poor quality at the time, over the better quality and powerful American cars equipped with soft Corinthian leather (see video). But Japan was evolving and had a solution ready for the oil shocks that caused gas lines in 1974: competitively priced cars that got good gas mileage. Americans changed their behavior and bought foreign cars.
When I was considering that era I noted Japan had a currency advantage from a very strong dollar. There was a world-changing event with the forming of OPEC that led to an opening for imports, and a business-as-usual mindset that you could see in Detroit's advertising. (Note at the end of the Chrysler commercial, the Cordoba is described as a small car.)
As is often the case with market direction, things continue with momentum until the market hits a air pocket forcing change. That momentum of success hid the market threat from Motown. I saw a corollary in the Central Valley winegrape industry 8 years ago. The dollar was gaining strength. There was a world changing event taking place; the Internet was shrinking the globe, Ciatti and Turrentine grape brokers were looking to expand their world network and I believed that would allow an opening for foreign wine to be imported in bulk squeezing out domestic growers. I didn't see any real coordination of resources directed at the threat.
My solution was to raise the possibility of a cooperative marketing agreement or even consider instituting an official marketing order. I believed it was important to raise awareness of the quality of Central Valley wines using mass advertising to support the higher pricing needed for the farmers there to compete with the shrinking world that had foreign competitors with currency, wage, and lower property cost advantages. A marketing order has worked for the Almond Industry. The Pistachio trade had flourished with an order. Advertising worked for the Dancing Raisins. Why not California winegrapes?
Nat and Carson were incredibly kind and patient and offered their own perspectives on the business. Its great to have made their connection because they are really incredibly wise and experienced businessmen. I finished my fish and chips paired with a citrus nosed sauvignon blanc.... but that's not important. What IS important is we had a good conversation and I came away with some new thoughts and not too many bruises.
Flash forward to last summer. I was invited by Nat and Carson to come and speak to the San Joaquin Valley Wine Growers Association. I was to be the warm-up act for one of the reigning celebrities in the wine business, Joe Gallo <gratuitous name drop>. Of course I gladly accepted the invitation. On the way down, I stopped in at Cardella Winery for lunch and a tasting of their limited-production wines. The family was generous with their time and hospitality. The wines I liked the most were their Sangiovese, Barbera, and Chardonnay. While this isn't a wine tasting Blog, I have to say all the wines were really well made and a steal for under $20 ...... I just stopped writing and went on-line to buy a half case of their Sangiovese .... but that's not important. What IS important is I didn't think the terms limited-production and San Joaquin Valley were really synonymous. But there is a growing number of wineries in the region taking that approach.My view of the Big Valley is as the producer of gateway and value wines for the US and world consumers and while that's largely true, I was really impressed by the efforts of the Cardella Family. I can see more opportunity for the region in their efforts.
The reality is there are continuing advances in wine making and vineyard management practices mostly from Fresno State that are driving wine quality higher by the day in the Big Valley and creating better and better value wines for the US consumer, but the actual marketing and promotion of California wine continues to languish after a long period of successful marketing that began in the 60's with Italian Swiss Colony.
I gave about a forty minute speech before having lunch of prime rib paired with Gallo Cabernet that was round and ripe with a slight nose of .... well that's not important. What ISREALLY important is beyond the Big Valley I believe most all of the California appellations are at a pricing inflection point relative to the rest of the world. Pricing increases will be difficult with an aging Boomer population who does remember the corny SwissColony Jingle but will slow in their appetite for drinking. A report from UC Davis not too long ago underscored my earlier point of view but it misses the broadness of the threat when it excludes the fine wine producing appellations.
The dollar is getting stronger and the reaction by big wine producers has been to import 19,300,000 cased equivalents in bulk wine thus far in the year. But its not just a bulk wine threat. The same threat is there for smaller producers when Millennials haven't been exposed to mass marketing of California wines and are more than willing to experiment with wine from countries such as Argentina, Spain, Portugal, Italy, Chile and Australia who present a cost and value challenge and in some cases have a state supported marketing budget.
As a fragmented business with many family growers statewide and many small wine producers, promotion of any worth has to be done in a cooperative manner and probably wont include the largest producers who likely view the current status quo as benefiting them. Acknowledging other organizations are doing part of what is needed already, I'd suggest the marketing and promotional needs of the San Joaquin Valley Growers, the North Coast growers and wine producers, and really all of California are more aligned than any other time in history.
What IS important is its time to restart the dialogue on a California marketing order. I recognize the political distance that exists with all the existing XXX.orgs focusing in a narrow way on their specific mandates, but the efforts can by symbiotic. Its time to have that discussion and I'm wondering who will step forward from within the wine business to coalesce the people and information, define the threat and opportunity, and execute on a plan?
After my speech desert was served of Tres Leche cake paired with a sweet white dessert wine that had a hint of apricot and ...... well that's not important. What IS important is its time to think about a marketing order that enhances the brand of authentic California wines. Before leaving the podium in Fresno, I presented the following ad as an example of an approach that took volume production and gave it a human authentic touch many years ago.
In this case, the proverb is backward. Staying silent and not promoting California is foolish. Far better to open our marketing mouths and let people know what the business represents versus presuming our home-court advantage is sustainable into future generations.